Economic Justification for Development and Operationalization of Rail-Freight-Corridors Between Hub-Seaports and Inland Container Depots in Nigeria

Abstract

Abstract The study provided economic justification for private sector investment in developing, revitalizing and making operable, the rail-freight-corridors between hub-seaports and inland container depots in Nigeria. It estimated the operator-benefits and profitability potentials of investment in each of the ten rail-freight-corridors consisting of existing but inoperable and proposed rail routes from the major seaports to the Inland container depots in different geopolitical regions of Nigeria. Secondary data on the import and export (cargo generation) capacities of each of the ICD regions to and from the respectively connected hub-seaport were obtained from the Nigerian ports authority statistical report covering a period of two years (2018 – 2019) based upon which the annual expected revenue earnings of the operators were estimated. The cost of investment was also obtained. Benefit-Cost-Ratio (BCR) and Net Present Value (NPV) were used to estimate the operator-benefits and profitability potentials of each rail route. It was found that six of the rail routes have BCR > 1; and NPV>0; implying higher operator-benefits over costs within the period while four of the rail-routes have BCR <1; and NPV <0; implying higher operator-costs over benefits.